Charities must disclose their related-party dealings
New questions in the recently launched 2023 AIS require charities to disclose their dealings with related parties.
For reporting purposes, an RPT is defined as a transfer of resources, services, or obligations among related parties. It does not have to include financial payment.
RPT reporting is designed to ensure that charities have good governance, and their interests and funds are protected. Related parties, including key management personnel, should not receive significant private benefits from charities.
Charities can manage the risk by recording related-party transactions and having clear conflict-of-interest policies and procedures. A RPT register would also help, the commission advises.
A reportable RPT may include:
- Fees paid to a related party for providing goods or services to the charity
- Loans from/to a related party
- Salary/wages paid to a related party’s relative(s)
- Transfer of charity property or assets to a related party
- Charity goods or services provided at a discount to a related party
- Significant use of charity property by a related party, and
- Investment in a related party.
The 2023 AIS HUB on the ACNC website has guidance on the information that should be provided, based on a charity’s size.